Few consumers would cite Bed Bath & Beyond (BBBY) as a discount store. But it turns out that prices at home products chain beat those of a leading Internet retail powerhouse.
According to a report from BB&T analyst Anthony Chukumba, Bed Bath & Beyond’s price for a basket of 30 selected items was 6.5% less than a comparable basket purchased from Amazon (AMZN). And that was before he applied the 20% discount coupons that Bed Bath & Beyond routinely mails out to potential shoppers, Yahoo Finance notes.
The analyst noted that Bed Bath & Beyond does not appear to be deliberately cutting its prices to beat Amazon. The difference in prices between the two retailers has actually been closing for some time. Chukumba adds that Bed Bath & Beyond has “built a real customer service culture.”
Online retailers like Amazon have been able to underprice traditional brick and mortar outlets because of their lower operating costs — i.e., Amazon doesn’t have to build and maintain stores. In fact, Amazon became the bane of many retailers like Best Buy (BBY), who discovered that consumers would go to its stores to examine merchandise only to buy it at a better price online.
Bed Bath & Beyond appears to have managed to lower its costs and control margins enough to best Amazon without the need for gimmicks.
Shares of Bed Bath & Beyond rose almost 1% in Wednesday morning trading.